in this article I am going to explain you and give you some examples about the “Change of Polarity” strategy which is a very useful, strong and also simple Price Action Strategy. I think is a very good start for the newbies. I was studying it in my first steps in trading and I am still using it. So, some literature first. The”change of polarity strategy” as described in ”Japanese Candlesticks Charting Techniques” a book of Steve Nison is the change of a support to a resistance and the change of a resistance to a support. The general idea of the above theory is when we have a support and this support will break in the future this support will become a resistance. On the other hand if we have a resistance and will break in the future this resistance will become a support. I will explain this better with some examples. Let’s see our first screen shot.
Look at this chart. It’s from EURUSD currency pair and I use a 1min chart. You can use every asset you like and also every time frame you like. So, we have a red horizontal line. Look at the beginning of the screen shot. The price hit the red horiztal line and it can’t break it. Then again, the price come back and hit the red horizontal line and it’s can’t break it again. This is our support and in the screen shot you can see that the price has tested it two times, but you can’t see the whole chart , you can see only this screen shot. Actually the price has tessted this support moe times. You can go to your platform and check it. After these to tries finally the price breaks this support level and is moving down. Then the price is come back to this level and this is the important part of this strategy. After the break of the support and when the price come again and hit this level you see that we have a rejection of the price about three times. Actually, the old broken support acts as a resistance now. We have the opposite situation for an old resistance which breaks and the price come back again and hit this broken resistance we have a new support.
This strategy is very simple, it’s about price action and it works the most of the time. Of course, every time you should use confirmation but this strat is really strong. It’s better to use a support or a resistance which has tested before from the price more than once.